Wrong approach

Dear Sir,

As the economic outlook continues to remain grim in parts of the world, companies there are planning to cut costs and streamlining their operations. But decisions taken without foresight and planning, while giving the impression of short-term gains, will not work well in the long term.  
The article, “Investing in reputation through the economic cycle” (Gulf Times, February 16) was quite timely in this context.  
As the article rightly points out: “The best business - and political - leaders prove their worth in times of economic stress. Those who ignore the worth of their reputations during a prolonged economic downturn risk becoming a mere footnote to history.”
The current trend  among many companies in the region is to reduce their workforce to reduce costs. But as a management specialist, I think this is the wrong approach and will produce major problems in the future for the firms following this policy.
The article points out: “Cut too deep, and sacrifice your best international talent, and take knee-jerk decisions on spending, and the buy-in price for re-acquiring the next, best global talent required to drive growth in an upturn will increase exponentially.” And one has to concur with that.
When a company lets a long-term employee go, it may be saving a monthly wage, but it also loses years of priceless knowledge that person has accumulated about the establishment’s  business. And that knowledge  may be hard to replace or that may very well end up benefiting a competitor.
Companies have also to take account of  the cost of rehiring. When things pick up again, as they inevitably do, they shall face all the expense involved with recruiting new staff and training them to the level of the employees they let go.
So rather than opting for short-term gain and longer-term pain, it might pay them to look at other cost-cutting measures first, because there are a number of ways to reduce the costs, without reducing the workforce.
One hopes that both the private and public companies will heed this advice.

RHR, (Full name and e-mail address supplied)

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